WHAT'S NEW IN THE 2019
NEGATIVE LISTS?
Tuesday 30th July marked the implementation of China’s revised Negative
and Encouraged Lists for foreign investment by the National Development and
Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM).
These effectively act as a manual for foreign businesses in China to
understand which sectors they are prohibited and restricted from investing in
by the authorities, and which enjoy incentives. The new Lists are composed of
two sets – one applying nationwide (Special Administrative Measures on Access
to Foreign Investment (2019 Edition)) and one applying purely to Free Trade
Zones (FTZ) such as Shanghai and Guangdong (Free Trade Zone Special
Administrative Measures on Access to Foreign Investment (2019 Edition)).
The Negative Lists replace their 2018 predecessors, whilst the Encouraged Lists
renew the 2017 versions.
For new entrants to the Chinese market, the regulations may seem complex
but they are in fact intended to make them simpler by consolidating them in
the Lists. Initially piloted in Free Trade Zones (FTZs) in 2015, they were later
expanded to encapsulate foreign investment nationwide, and a separate list
governing both domestic and foreign business was produced. The most
restricted areas are those related to national security, strategic natural
resources and the public interest. Whilst this may mean a less onerous
approach to market entry, critics have said that it will increase compliance
costs as the focus shifts from the approvals process to scrutiny during the
conduct and operations stage.
BRITCHAM POLICY INSIGHTS| PAGE 1